Thursday, July 10, 2008

Abu Dhabi aims to export caviar

[T]he Abu Dhabi initiative aims to provide a lucrative export opportunity for the UAE as it seeks to diversify away from oil production, while also helping safeguard the future of the endangered species.

Bin Salem Group and United Food Technologies, its German partner, are investing $80m in the project, centred around a climate-controlled facility in an industrial park on the outskirts of the capital. Here 64 swimming-pool-sized basins will house thousands of sturgeon, ultimately providing up to 40 tons a year of caviar and 710 tons of smoked and sliced sturgeon meat.

Work has started on the farm, the world’s largest single-site plant, which should take 14 months to build. The joint venture, which has not yet been named, will take two years from the start of operations to bring fish to the maturity needed to produce the high-grade Ossetra caviar. ...Five years in the making, Bin Salem Group forged ahead with the project when the United Nations Convention on International Trade in Endangered Species, known as Cites, limited the export of Caspian Sea sturgeon, squeezing the market for the prized delicacy.

“We saw the gap between supply and demand and then the UN resolution created a great opportunity for a new industry – caviar farming,” says Michel Nassour, Bin Salem’s financial adviser.

I suspect this can only make sense if the energy required to bring temperatures to Russian like levels is priced at well below market.

Perhaps the most ambitious project to make up for the reduced supply is the farm in Abu Dhabi in the United Arab Emirates, which will breed baerii, or Siberian, sturgeon. Backed by private investors, the $48 million facility is scheduled to be completed by the end of 2008, with the first caviar expected to be sold the next year. At its peak the farm will produce 32 tons annually, two times what is produced today in California.

Abu Dhabi may seem like an odd place to build a fish farm, but labor is cheap there and energy is cheaper. And there is a huge market for caviar on cruise ships that dock there, in the city’s hotels and among the Arab elite. Still, the project requires sophisticated water recirculation technologies to function in a desert. For the sturgeon to grow quickly and to produce eggs, for example, the water will need to be cooled to 68 to 72 degrees. And not a drop can be wasted. According to Christoph Hartung, chief executive of the German firm United Food Technologies, which has been hired to build and manage the farm, 95 percent of each day’s water will be filtered and reused.

As anyone living there knows labor is cheap in Abu Dhabi because it is imported. Other nations could imitate that policy -- except, I suppose, that it is political infeasible.